TaxTMI 
TaxTMI 
2023 (9) TMI 736
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....d Enterprises ("AEs") and thereby erred in imputing interest on the same. 4. The DRP/ AO/TPO erred in treating the delayed receivables as a separate international transaction, although the same does not fall within the purview of "capital financing" in terms of Section 92B of the Income- tax Act, 1961 ("the Act"). 5. The DRP/AO/TPO ought to have appreciated that the receivables emanating out of the principal transaction of rendering services, the same ought to, if at all, be benchmarked in an aggregate manner with the said services. 6. The DRP/AO/TPO erred in imputing interest on the outstanding receivables from AEs, without appreciating that the Appellant followed the same policy of not charging any interest on the receivables from non-AEs. 7. The DRP/AO/TPO erred in not appreciating the fact that the Act provides for taxing only real income whether received or accrued under the regular provisions and does not provide for taxing notional income. 8. The DRP/AO/TPO erred in not appreciating the fact that TP adjustment cannot be made on hypothetical and notional basis until and unless there is some material on record to show that there has been under charging of real i....
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....scrutiny under CASS and statutory notices u/s. 143(2) and 143(1) were issued and served on the assessee. 2.2 The Ld.AO noted that, the assessee had international transaction exceeding Rs. 15 crores and therefore reference was made to the Ld.TPO for computing the arms length price of such international transactions. The Ld.TPO upon receipt of the reference, called for the economic analysis in respect of the international transactions in form 3 CEB. It was noted that, the assessee had undertaken following international transactions: International Transactions Amount As per Form No. 3CEB (Amount in INR) Provision of Software Development Support services 2,45,87,45,842 Provision of technical call centre services (ITES) 29,75,29,568 Provision of marketing support services (MSS) 10,40,06,090 Deemed International transaction 1,59,10,672 Not an international transaction - disclosed in Form No. 3CEB on abundant caution basis Unearned Revenue 6,69,41,648 Year end balances (Receivable) 128,38,26,528 Year end balances (Payable) 12,08,57,876 2.3 The Ld. AO noted that the assessee concluded the above international transactions to be at arms length in the TP study as it had ea....
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....,980/- Rs. 9,77,91,197/- Total Rs. 49,60,55,277/- Or Rs. 49,60,55,280/- Aggrieved by the order of the Ld.AO, assessee is in appeal before this Tribunal. 6. At the outset, the Ld.AR submitted that the only issue alleged by the assessee under transfer segment provisions are in respect of the computation of notional interest on outstanding receivables. 6.1 He submitted that ground nos. 2-12 are in respect of this issue and this issue stands covered by assessee's own case for A.Y. 2016-17 passed in IT(TP)A No. 268/Bang/2021 by order dated 28/11/2022. The Ld.AR submitted that all the contentions of the assessee has been addressed therein by adopting the LIBOR rate + 200 basis points. 6.2 On the contrary, the Ld.DR relied on the orders passed by the authorities below. We have perused the submissions advanced by both sides in the light of records placed before us. 6.3 Primarily before this Tribunal, the Ld.AR has submitted that interest on outstanding receivables cannot be treated as a separate international transaction. However this issue is no longer resintegra by virtue of the decision of Hon'ble Special Bench in case of Instrumentation Corporation Ltd. vs. A....
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....er Section 80G of the Act, more so in view of such claimed not being prohibited by the said section, it would lead to double disallowance. Therefore the disallowance made by the Assessing Officer ought to be set aside. The learned AR placed reliance in this regard is placed on the decision of coordinate bench of the Tribunal in the case of First American (India) Pvt. Ltd. v. ACIT (Order dated 29.04.2020 passed in ITA No. 1762/Bang/2019). 69. We heard the rival submissions and perused the material on record. We notice that the impugned issue has been considered by the coordinate bench in the case of First American (India) Pvt. Ltd (supra) where it has been held that - We have perused submissions advanced by both sides in light of records placed before us. 11. Section 135 of Companies Act, 2013 requires companies with CSR obligations, with effect from 01/04/2014. Finance (No.2) Act, 2014 inserted new Explanation 2 to subsection (1) of section 37, so as to clarify that for purposes of sub-section (1) of section 37, any expenditure incurred by an assessee on the activities relating to corporate social responsibility referred to in section 135 of the Companies Act, 2013 shal....
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.... 33 allows development rebate on machinery, plants and ships. * Section 34 states conditions for depreciation and development rebate. * Section 35 grants deduction on expenditure for scientific research and knowledge extension in natural and applied sciences under agriculture, animal husbandry and fisheries. Payment to approved universities/research institutions or company also qualifies for deduction. In-house R&D is eligible for deduction, under this section. * Section 35CCD provides deduction for skill development projects, which constitute the flagship mission of the present Government. * Section 36 provides deduction regarding insurance premium on stock, health of employees, loans or commission for employees, interest on borrowed capital, employer contribution to provident fund, gratuity and payment of security transaction tax. Income Tax Act, under section 80G, forming part of Chapter VIA, provides for deductions for computing taxable income as under: * Section 80G(2) provides for sums expended by an assessee as donations against which deduction is available. a) Certain donations, give 100% deduction, without any qualifying limit like Prime Minister's Nati....
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....under Chapter VI A, which is considered for computing 'Total Taxable Income". If assessee is denied this benefit, merely because such payment forms part of CSR, would lead to double disallowance, which is not the intention of Legislature. 20. On the basis of above discussion, in our view, authorities below have erred in denying claim of assessee under section 80G of the Act. We also note that authorities below have not verified nature of payments qualifying exemption under section 80G of the Act and quantum of eligibility as per section 80G(1) of the Act. 21. Under such circumstances, we are remitting the issue back to Ld.AO for verifying conditions necessary to claim deduction under section 80G of the Act. Assessee is directed to file all requisite details in order to substantiate its claim before Ld.AO. Ld.AO is then directed to grant deduction to the extent of eligibility. 70. Respectfully following the above decision of the coordinate bench we remit the issue to the AO with a direction to verify the details and allow the deduction to the extent of eligibility. The assessee is directed to furnish the relevant details to substantiate the claim and cooperate with the ....